How do we in Indiana stack up against the competition? Many of us cringe when we hear that question, especially during these dour economic times. But we remain interested, because rankings can communicate the complexities of our economic performance in ways that are intuitive and thus easy to grasp.

Indiana is a state with some sharp differences that set us apart even from our Midwest neighbors. That's surprising, since there aren't any mountain ranges or large bodies of water that separate us from the states closest to us. But something in our development helped create a state with a more homogeneous population, a more production-oriented workforce, and a more frugal mindset towards government here than what you find in most other Midwest states. And, not surprisingly, the differences between Indiana and states in some other regions of the country are wider still.

Those differences come through in rankings of economic performance, such as the Development Report Card for the states recently released by the Corporation for Enterprise Development, a Washington D.C. based think tank. The report's bottom line isn't exactly front page news -- Indiana received a "C" grade overall in 2002 -- but the data and the various rankings that go into this result do provide food for thought.

Many of the report's individual measures depict aspects of the economy that we can be very proud of. We're a state of homeowners, judged by the high rates of home ownership here. Differences in income between rich and poor are less severe here than in many other states. Our manufacturing-intensive employment base gives us a relatively high proportion of households who are covered by some kind of health insurance. And the report put infant mortality in Indiana as second best in the nation last year.

We fare worse when compared against our peers in terms of employment and wage growth. That's hardly news to those of us who have followed the state's economic fortunes of late, or to those who are counting state government tax receipts in Indianapolis.

What is particularly interesting about CED's report is its inclusion of a number of performance measures that attempt to assess what might broadly be termed "innovation." By looking at such things as funds spent on research and development, the number of patents issued, and even the number of businesses spun out of a research university's operations, the report usefully reminds us that the levels of these important, future-oriented activities are not evenly spread among states.

Unfortunately, this is a case where simple rankings fail to communicate disparities. Indiana might take some comfort in its middle-of-the-pack ranking on some of these measures, were it not for the fact that leaders are so far out ahead. For example, the $60 per worker in venture capital invested in Indiana businesses in 2000 placed us 30th among the 50 states. But that amount is dwarfed by the more than $2,400 per worker invested during that same year in Massachusetts, the first place state.

It's easy to question the relevance of any attempt to judge all 50 states by the same yardstick. Not all areas of the country can be well diversified, high paying, and fully plugged into the information economy. Indeed, the same could be said for the ten metropolitan areas or the 92 separate counties that exist within our state.

But these rankings, particularly those as carefully conducted as those produced by CED, are more than just bragging points. They are attempts to measure, however crudely, things that really matter in the development and evolution of states' and cities' economies. However much it may wound our pride at times, we would be well advised to keep an eye on what our competitors are doing.

Patrick Barkey is director of the University of Montana Bureau of Business and Economic Research. He has been involved with economic forecasting and health care policy research for over twenty-four years, both in the private and public sector. He served previously as Director of the Bureau of Business Research (now the Center for Business and Economic Research) at Ball State University, overseeing and participating in a wide variety of projects in labor market research and state and regional economic policy issues. He attended the University of Michigan, receiving a B.A. ('79) and Ph.D. ('86) in economics.

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